European Commission endorses €101m Croatian national broadband scheme

The European Commission has determined that Croatia's €101.4 million Next Generation Network (NGN) Broadband plan is in line with EU state aid rules. This scheme aims to provide fast internet access where it is currently not available, in particular in rural areas.

Commissioner Margrethe Vestager, in charge of competition policy, said: "Croatia's broadband scheme will bring faster internet to consumers and businesses that currently do not have it. It will help Croatia to put in place the necessary infrastructure for an information society and contribute to creating a Digital Single Market within the EU."

Croatia's current broadband market is characterized by high prices and low take-up rates compared to the EU average. This scheme aims to significantly improve the situation and help Croatia increase its connectivity and meet the targets set out by the Commission in the context of the Digital Single Market.

Backhaul networks, such as the Next Generation Network (NGN) in Croatia, provide the backbone of internet networks and can be thought of as information highways. Next Generation Access (NGA) networks, which can be thought of as more local roads, connect into the NGN.

The previous Croatian broadband scheme, the National Broadband Plan, was approved by the Commission in January 2016 and supported the roll-out of NGA networks in un-served or underserved areas. The purpose of the new measure is to provide sufficient upstream capacity to sustain the previously approved scheme in rural areas.

Croatia's NGN will be rolled out partly in areas where either no NGN backhaul network exists, or areas where the backhaul infrastructure is insufficient to meet projected needs. No operator has shown any interest to invest commercially in the scheme's target areas, which were identified by Croatia through a detailed mapping exercise and two public consultations.

The scheme aims to increase the coverage of high speed broadband and provide speeds of 100 Mbit/s symmetrical (i.e. upload and download). It will run until 31 December 2023. The new infrastructure will be financed mainly through the European Regional Development Fund and partly by national funds, and the network will remain in public ownership.

The management of the scheme is attributed to a public undertaking, OiV, which will offer long term leasing agreements on the infrastructure to all interested operators. These operators will subsequently be able to offer connection services to local access providers, which in turn serve end consumers. In this way, the new NGN backhaul network will support the NGA networks previously approved under EU state aid rules.

The Commission assessed the measure under EU state aid rules, in particular its 2013 Broadband Guidelines. These guidelines aim to ensure, amongst other things, that public funding does not take the place of private investment. They also ensure that other service providers can use the publicly funded infrastructure on a non-discriminatory basis. This protects effective competition, which is a key driver for investment and better prices and quality for consumers and businesses.

The Commission concluded that the positive effects on competition in the Croatian broadband market outweigh possible distortive effects on already established operators. It therefore found the Croatian NGN scheme to be in line with EU state aid rules.